Key takeaways of the conference call

Installed power generation capacity of Wind as end of Sep 2011 stood at 254 MW and that of biomass was at 50.5 MW thus aggregating to 304.5 MW.

In Q2FY12 the company has commissioned new wind assets of 64.75MW in India and 10.5 MW in Croatia.

By Q1FY13 the company will have a wind power capacity of 450 MW and biomass capacity of 106 MW

The annualised PLF of existing wind capacity for Q2FY12 improved to 27.27% compared to 26.04% in the corresponding previous period. On the other hand the PLF of Biomass plants came down to 38.6% compared to 46.5% in the corresponding previous period.

Operational income for the quarter was higher by 14% to Rs 68.42 crore and the operating profit (excluding Other income) was up 10% to Rs 37.39 crore. PAT was down by 44% to Rs 4.02 crore.

Wind Power division registered 28% rise in operational income for the quarter to Rs 50.76 crore and the operational profit of the same was up by 24% to Rs 40.88 crore. On the back of higher capacity and increased PLF the generation (wind) for the quarter ended Sep 2011 stood at 124.85 million units compared to 95.22 million units in the corresponding previous period. Average realisation of wind in Q2FY12 at Rs 4.24/unit was higher as compared to Rs 4.17/unit in corresponding previous year. This is largely on account of more sales to Group Captive consumers which is expected to continue in the future as well. However the performance of wind assets continued to be impacted due to about 10-15% drop in grid availability during the quarter and this situation is expected to continue in coming quarters as well.

Biomass registered 13% fall in operational income for the quarter to Rs 17.66 crore and at operating level it was a loss of Rs 3.49 crore compared to a profit of Rs 0.99 crore in the corresponding previous period. The biomass division got impacted by non materialisation of tariff revision in both TN & Rajasthan which was due in April 1, 2011 coupled with increase in cost of biomass as well as Rain in Rajasthan and withdrawal of permission to intra state 3^rd party sale by TN.

The average realisaion of biomass was lower at 4.59/ unit (down from 5.51/unit in Q2FY11).

The Realisation of Biomass is expected to increase going forward as the company is expected to exit from PPAs on mutual consent for all TN biomass power plants and sell power at merchant tariff.

The 10MW Pollachi Biomass unit was commissioned in July 2011 and became fully operational in September 2011. Similarly the 10 MW Hanumangarh plant has been commissioned in October 2011 with sale to Tata Power Trading. The Hanumangarh plant is registered and eligible for REC.

In addition the company expects the Narsinghpur and PSR Green projects totalling 17.5 MW expected to be operational by end December 2011. The 20MW DY Patil Cogen plant and the 8MW Kishanganj are expected to be commissioned in Q4FY2012.

The current 155MW of wind capacity in TN is under group captive model and the new capacity of 155 MW will also be in group captive model.

Receivables from TNEB is about Rs 30 crore. The receivable is largely towards biomass plants as the wind power generated is largely supplied to group captive. Of the four biomass plant the company currently has in TN, two plants were already moved out of PPA on mutual consent basis and another is on its way out. But the fourth plant i.e. Pollachi Biomass plant being new one will be under PPA for another 3 months and beyond that it will be under PPA depending on the tariff rise effected in TN. As far as Rajasthan Biomass plants they continue to be under PPA as there is no early exit option.

Q3FY12 realisation for wind will be even better with additional revenue from REC and increase in tariff for group captive customers in case of power tariff revision in TN as the group captive tariff also capture a part of incremental power tariff by SEB.

Under the current agreement with group captive consumers, if there is tariff revision by TNEB, about 50% of the incremental rise in tariff will be escalated to tariff on which the company supplies power to the Group captive consumers. Now with TNEB petitioned TNERC for a tariff hike of about Rs 1.50/unit and if there was a tariff revision, the group captive tariff in TN will increase.

Evacuation issue in Southern TN: Since TNEB does not have money to invest in infrastructure they have mooted PPP model and it will take another two years for the infrastructure to come up. In the mean time PGCIL line is coming from Kerala side which will help to some extent.

Intra state open access given by TN for Biomass plants has been withdrawn from July 2011. They never allowed export of power outside TN.

TNEB petitioned for a power tariff rise of Rs 1.50/unit with TNERC that will help them with additional revenue of about 9000 crore a year. Moreover though the payments delayed by TNEB, they have not defaulted so there wont be an issue in collection of receivables.

By March 2012 the debt will be about Rs 1300 crore.

The company is looking at ECB for funding the capacity expansion programme.

Capital Work in Progress as end of September is about Rs 850 crore.

All new WTGs are expected to clock a PLF of about 29-34%.

The company is taking steps to broad base fuel and supplier base and fresh initiatives are taken for energy plantation which would yield positive results in coming quarters. In addition usage of municipal solid waste and other alternatives, improvement in specific fuel consumption due to more usage of processed fuel/better operational efficiencies along with procurement of fuel at more reasonable price with improved WC cycle on the back of moving out of PPA is expected to reduce the cost of biomass plant leading to margin improvement going forward.